Whole Life Insurance Riders: Add Benefits to Your Base Policy

By Sanford Ellowitz on January 14th, 2010

When you buy whole life insurance you may be offered the opportunity to add various riders to your policy. Most riders add benefits, at an extra cost, to the policy. However, riders may also put a restriction on your policy, such as refusing a death benefit claim if the insured engages in certain occupations or hobbies.

The Cost Of Riders

The cost for each rider is calculated individually, and is usually expressed as a percentage of the base premium. Since the exact price of any policy remains unknown until all medical underwriting, or a review of your health has been completed, only an estimate of the cost can be made until the policy is issued.

Measure Cost Versus Benefit

The decision to add any or all riders should weigh the need for the extra benefit, as well as its cost. If you are considering a rider you should consider the additional premium cost, the amount of the additional payout, and the possibility of receiving the benefit.

When Riders Can Be Added

Riders are usually added when the policy is issued, but an insurer may allow one or more riders to be added at a later time--subject to the terms of the individual policy.

The Most Common Riders

There are a variety of riders available, here are several of the most common riders:

Accidental Death. This rider is sometimes called accidental death and dismemberment (AD&D), or double indemnity. This rider adds an additional benefit to the face value of the policy. It usually doubles, but sometimes triples, the payout if the insured dies because of an accident--rather than death due to natural cause such as an illness. Although it can be very helpful for the family to get a much larger benefit, the additional cost of the rider must be consider along with the possibility of the insured dying of an accident (defined by the terms of the policy). You might balance the cost of this extra benefit against how much additional permanent life insurance could be bought for the same amount of money

Family/Child Benefit. This rider allows for other family members to be insured when the policyholder is issued a policy. Through this rider, additional policies that are issued for family members are usually term policies that may be converted to whole life policies at a later time

Monthly Family Income. In addition to the death benefit, this policy provides a monthly income to be paid to the surviving family members for a set period of time. This can be extremely beneficial if the insured is the sole source of support for the family

Waiver of Premium. This rider allows the policy to be kept in force, without paying premiums, if the policyholder is considered disabled, under the terms of the insurance policy. This can be very important if the breadwinner cannot work due to disability and cannot keep up the policy payments. Without this protection, the policy might lapse due to non-payment. If the breadwinner then dies, the family is left without his or her income and without the proceeds of the insurance policy

Automatic Premium Loan. This rider ensures that if you do not make a scheduled premium payment a loan is made by the insurer, against your policy, and used to pay your premium. As long as there is enough cash value to guarantee loan payments, your policy should remain in force

Living Benefits Riders

These types of riders, particularly the accelerated death benefit and long term care riders, are relatively new and recognize that the policyholder or the family may need money while the insured is living. These riders might allow for payment from the policy while the insured is still alive, based on meeting certain guidelines. Any benefits paid before the insured dies typically reduce the death benefit.

Accelerated Death Benefit. With this rider a portion of the death benefit is paid if the insured is disabled or diagnosed with a terminal illness. This rider may make funds available to take care of the insured, rather than running up large bills to be paid off from the death benefit

Long Term Care. This rider allows the funds in the policy to be accessed before the insured dies, should the insured be certified as needing care in a long term facility, such as a nursing home

Guaranteed Insurability/Guaranteed Issue. These riders vary by issuer, but generally allow you to purchase additional permanent insurance, without having to prove medical insurability. This can be valuable if your insurance needs increase in the future and you have changes in your medical condition

These are only some of the more common riders available, so always ask what other riders may be offered with your policy.

Shop Around Online

It's always helpful to shop around when choosing a policy. You can compare life insurance rates and get competing quotes by entering your zip code here. Then you can make the selection best suited to your family's needs.